AMA Studies Show Continued Cost Burden of Medical Liability System

The American Medical Association (AMA) today released a new series of trend reports in its Policy Research Perspective series illustrating the price Americans pay for the nation’s broken medical liability system.

“Information in this new research paints a bleak picture of physicians’ experiences with medical liability claims and the associated cost burdens on the health system,” said AMA President David O. Barbe, M.D., M.H.A. “The reports validate the fact that preserving quality and access in medicine, while reducing cost, requires fairness in the civil justice system. Every dollar spent on the broken medical liability system is a dollar that cannot be used to improve patient care.”

The first report analyzes medical liability claims frequency among patient care physicians in the U.S. and finds that getting sued is virtually a matter of when, not if, for physicians. Highlights in the report include:

Getting sued is not an uncommon event for physicians. More than a third of physicians (34 percent) have had a claim filed against them at some point in their careers.

Because older physicians have been in practice for a longer time and thus have had more exposure, the probability of getting sued increases with age. Nearly half (49.2 percent) of physicians age 55 and over have been sued, compared to 8.2 percent of physicians under age 40.

There is wide variation in the frequency of liability claims between specialties. General surgeons and obstetricians/gynecologists have the highest risk of being sued, more than 3½ to 4 times greater than pediatricians and psychiatrists, who have the lowest risk.

Before they reach the age of 55, more than 50 percent of general surgeons and obstetricians/gynecologists have already been sued.

“Even though the vast majority of claims are dropped, dismissed or withdrawn, the heavy cost associated with a litigious climate takes a significant financial toll on our health care system when the nation is working to reduce unnecessary health care costs,” Dr. Barbe said.

The second report analyzes indemnity payments, expenses, and claim disposition based on a sample of medical liability claims that closed between 2006 and 2015 aggregated by PIAA, the association representing the medical and health care professional liability insurance community. The report’s key findings include:

The average expense incurred on medical liability claims that closed in 2015 was $54,165 – a substantial increase of 64.5 percent since 2006.

In 2015, 68.2 percent of all closed claims were dropped, dismissed, or withdrawn; however, they are not cost-free. Each of these claims costs an average of $30,475 to defend, accounting for more than one-third (38.4 percent) of total expenses incurred.

Only 7 percent of claims are decided by a trial verdict, and the vast majority (87.5 percent) were won by the defendants.

In about 25 percent of claims, an indemnity payment was paid to the claimant. The average indemnity payment was $365,503 for claims that closed in 2015—a notable increase of 11.5 percent from two years prior.

The third report analyzes annual changes in medical liability insurance premiums for 2008-2017 from the Annual Rate Survey Issues of the Medical Liability Monitor. Highlights in the report include:

Despite increasing stability in liability premiums, the prospects for the near future are less than certain. Since 2015, more premiums increased than decreased, reversing the trend of the earlier part of the study period. In 2017, 13.4 percent of premiums were higher than those for 2016. Since 2010, 12 to 17 percent of premiums have increased from the previous year.

The share of premiums that decreased from one year to the next has been falling since 2008, particularly in the last three years. Only 12.4 percent of premiums decreased in 2017. This is substantially down from its peak in 2008, when almost 43 percent of premiums fell below their 2007 levels.

Physicians continue to face high costs of insuring themselves against medical liability claims. There is wide geographic variation in premiums. In some areas of New York, premiums for obstetricians/gynecologists reached $214,999 in 2017– while premiums for obstetricians/gynecologists in some areas of California were $49,804.

Together with state and specialty medical associations and other stakeholders, the AMA is pursuing both traditional and innovative medical liability reforms to strike a reasonable balance between the needs of patients who have been harmed and the needs of millions of Americans who need affordable, accessible medical care. More information on AMA solutions to reshape the current medical liability system to better serve both physicians and patients, please read Medical Liability Reform– Now!

The new reports are the latest additions to the AMA’s Policy Research Perspective series that support AMA federal, state and private sector advocacy agendas. For additional information from the new reports, go to the AMA website.